25 Aug 2023

Anta’s 1H23 revenue was up by 14.2% YoY to Rmb29.65bn, mainly driven by i) 6.1% YoY growth from core brand sales to Rmb14.2bn as a result of retail market recovery post pandemic and the ongoing DTC model transformation; ii) 13.5% YoY growth from FILA thanks to growth in both retail market and online biz; and iii) 77.6% YoY growth from all other brands, mainly driven by the better than expected strong performance in Descente and Kolon Sport. Overall GPM was up by 1.3ppt YoY to 63.3% on the back of i) higher GPM contributed the ongoing DTC model transformation, ii) decrease in write-down of inventories from FILA; and iii) higher sales mix from all other brands which charged a higher GPM amid higher ASP. On the cost side, S&D cost ratio dropped from 36.3% in 1H22 to 34.0% in 1H23, thanks to a 3.2ppt decline in A&P as i) higher promotional costs for the Beijing Winter Olympics in 1H22; and ii) slowdown in store openings and upgrades during the period. Admin cost ratio also dropped from 6.6% in 1H22 to 5.7% in 1H23 with a stable R&D ratio at 2.3%. JV loss widened from Rmb178m in 1H22 to Rmb516m in 1H23 due to impairments on goodwill and trademarks of Rmb1.13bn related to Peak Performance biz. As a result, NP surged by 32.3% YoY to Rmb4.75bn, with NPM up 2.2ppt YoY to 16.0%. Interim-DPS was at HK$0.82, representing a payout ratio of 45% (1H22: 42%).

CROSBY Research – Anta (2020 HK/BUY): Solid 1H23 results with expanding OPM